The Zambia Chamber of Mines has called for the removal of the 16 per cent export levy on precious stones and metals to discourage illegal mining in the country.
Last Wednesday, during the final session of Parliament, Vice-President Inonge Wina said government faced challenges in quantifying the exact amount of gold produced in Zambia due to the huge numbers of illegal miners scattered across the country.
“Mr Speaker, there is a lot of gold mining going on in the country, but it has been undertaken by illegal miners as we call them these days. There is a lot of artisan mining in areas in Eastern Province like: Vubwi, Petauke, and in Lunao Valley, in Mkushi and many other areas. So, government has taken interest in what is going on in the mining of gold and ZCCM-IH is taking stock to investigate the issue of gold mining in Zambia,” said Vice-President Wina.
“We know that in Mwinilunga, new deposits have been discovered and they are already some artisan miners there, but government has sent security defence forces to secure security of the mines. Mr Speaker, the quantities are not yet well known because of the illegal nature in which this industry has been tackled. But before long, government will come up with the actual figures of gold mines in Zambia in various sectors, including the mining companies.
Commenting on the development, Chamber of Mines president Goodwell Mateyo said the 16 per cent export levy, coupled with the 2019 mining fiscal regime, which ranged from four to six per cent depending on copper prices on the international market, had discouraged many miners to formalize their operation in fear of making losses.
“Obviously, if there is illegal mining, it means that the tax revenue from VAT is extremely minimal to the ficus. But again, we don’t know how much gold is being mined. What I can say is that for as long as we have 16 per cent export levy on precious metals, that incentivizes illegal mining rather than mining being declared through normal channels where taxes are actually declared. It disincentives formalization of mining of precious metals. It is very high! Because if you add to that you also have mineral royalty on top of that; it means you have 22 per cent tax on the top-line even when you start paying any costs or expenditures,” Mateyo said in an interview.
He observed that the increased number of illegal miners in the country was a reflection of the mining sector’s huge tax burden.
“That tax burden is high, and what I am saying is that it takes away the incentive for someone to formalize things and declare the accurate productions because it is a sector that is overtaxed! This (last) week, a Statutory Instrument was signed, which removed export review on precious stones, the export levy still applies to precious metals. So, in that case, it still makes the cost of compliance quite high,” he added.
“It (the export levy) has to be removed across the board, not just for precious stones, but for precious metals as well. It will encourage formal investments in the sector. It will certainly reduce illegal mining, it won’t do away with it, but it will reduce the amount of illegal mining.”
Mateyo further said that the Chamber also had difficulties in quantifying how much gold was being produced in Zambia as most mining companies predominantly mined copper.
“Quite frankly, I don’t know! Most of our members are predominantly copper miners, even those that were mentioned as producing gold. Gold is in small quantities of the by-product of the process. So, in terms of the extent of how much gold is available and how much gold is being mined, unfortunately, we don’t have that on our radar,” said Mateyo.